BEIS proposes shortening accounts filing deadlines by three months, changing small and micro exemptions and improving the financial information which is filed with Companies House

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16 Dec, 2020

The Department for Business, Energy and Industrial Strategy (BEIS) has published a consultation on improving the financial information which is filed with Companies House.

The Government believes there are opportunities to improve the way financial information is filed with, and published by, Companies House. It is seeking to deliver benefits for those filing information, the users of that information, for Companies House and for the rest of government.

The headline proposals are to:

  • Shorten the time limits for filing annual accounts at Companies House from six months to three months for public companies (plcs) and from nine months to six months for private companies;
  • Require all accounts filings to be digital with full i-XBRL tagging;
  • Introduce a ‘file with government once’ approach which would also cover tax filings;
  • Require directors to make a formal declaration of entitlement to small and micro company accounting exemptions;
  • Remove some small and micro company exemptions; and
  • Give Companies House greater powers to make checks on financial information.

The proposals in the consultation seek to:

  • Deliver efficiencies for filers, users and Companies House by requiring digital submission of accounts in a machine-readable format, bringing the UK into line with global best practice;
  • Expand the use of tagging standards to make comparison and bulk analysis of accounts simpler for investors and assist businesses seeking investment;
  • Simplify the multiple processes for filing financial information across Companies House and HMRC systems, and explore opportunities for filing financial information once with government;
  • Tackle fraud and error by closing known loopholes in filing requirements and address problems of companies filing the wrong set of accounts;
  • Improve the quality and value of information on the register by reviewing the timescales for delivering accounts and exploring options to improve how information is displayed; and,
  • Require additional information to be submitted with accounts to improve their statistical and analytical value.

The consultation sets out proposals under three themes:

How information is submitted to Companies House

The first part of the consultation focuses on how accounts are delivered to Companies House and includes:

  • Proposed new timescales for accounts to be filed. It is proposed to cut the time limit for filing accounts from six months to three months for a plc and from nine months to six months for a private company. The Government states that this will improve accuracy as financial information is often significantly out of date before it is filed with Companies House.
  • Options for progressing towards filing once with government which would also cover tax filings where the same set of accounts would be received by both Companies House and HMRC.
  • Proposals to require accounts to be delivered digitally and to introduce full tagging of accounts in line with the requirements that are already in place when filing with HMRC. The consultation indicates that this will be an important step towards any future plans for companies to be able to file once with the government.

What information should be filed at Companies House

This part of the consultation outlines the information that is currently required by Companies House and asks whether further information might improve the value of the register. It includes:

  • A proposal that company directors should confirm the company’s eligibility to file small or medium-sized accounts under Part 15 of the Companies Act. Under the proposals all three threshold conditions set out in Part 15 of the Act (turnover, balance sheet and number of employees) will be required to be disclosed by all companies. It is proposed that the director(s) will have to confirm that the company meets the threshold conditions to file under the regime being used. In the case of dormant accounts being filed, it is proposed that the declaration will confirm that the company is not trading and meets the criteria for filing dormant accounts.
  • Proposals which will also see Companies House introduce validation checks to ensure that the threshold conditions match the requirements for the filing regime being used. Additionally the Government proposes to create an offense if a false declaration is made by director(s).
  • Proposals for revising the small company accounts filing options. These include proposals to:
    • Remove the current filing exemptions whereby small and micro companies do not need to file their profit and loss account.
    • Require micro entities to provide more information in accounts filed at Companies House.
    • Abolish ‘abridged accounts’ which enable small companies to omit some information from their profit and loss account and balance sheet prepared for members and for filing.

What Companies House does with this information

The final part of the consultation explores what Companies House should do with information it receives in accounts. It:

  • Sets out proposals to increase the checking of accounts. This would include a check by Companies House to ensure that the information provided is coherent, complete for a company of that size/type and consistent with accounts submitted to other relevant agencies.
  • Asks for views on how financial information could be better displayed on the register.

Responses are requested by 3 February 2021.

A press release and the full consultation are available on the BEIS website.

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